The A2 Milk Company Ltd (ASX: A2M) share price had a tough time in March.
During the month, the infant formula companyâs shares lost 12% of their value.
This compares to a 1.1% decline by the benchmark S&P/ASX 200 Index (ASX: XJO).
Why did the A2 Milk share price underperform?
There were a couple of reasons why A2 Milk shares took a tumble in March.
The first was concerns over trading conditions in the lucrative China market. When A2 Milk released its half-year results in February, it warned that it was entering a challenging period with a falling birth rate and changes to regulations.
A2 Milkâs CEO, David Bortolussi, commented:
We are in good shape heading into an increasingly challenging period with the rolling impact of the decline in the birth rate and a market wide transition of China label product to the new GB standard.
Investors appear to believe the second half of FY 2023 could be tricky and may be questioning the companyâs ability to deliver on its guidance.
What else?
Also potentially weighing on the A2 Milk share price was a broker downgrade from Bell Potter last month.
According to the note, the broker downgraded the companyâs shares to a hold rating from buy with a reduced price target of $6.80.
Bell Potter explained its decision, commenting:
We downgrade from Buy to Hold. Ultimately A2M and SM1 balance dates donât align and SM1 issues may simply reflect restocking and destocking decisions on the part of A2M around SAMR registration. While we like the long-term story in A2M, we are cognisant that FY24e market expectations are higher than ours and unfortunately we saw more in the recent SM1 1H23 result to support our current forecasts than make us consider materially upgrading them.
The post Why did the A2 Milk share price crash 12% in March? appeared first on The Motley Fool Australia.
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More reading
- Why is the A2 Milk share price underperforming on Tuesday?
- Should I buy A2 Milk shares at $6?
- Why A2 Milk, Accent, Northern Star, and Select Harvests shares are dropping
- A2 Milk share price slides amid $139 million buyback completion
- At almost $7, can the A2 Milk share price go any higher?
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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